Tim Tebow’s Potential Salary Incentive Explained

There’s been some speculation that the Jets are holding QB Tim Tebow back from playing because of a mid-level incentive in his contract. If Tebow were to obtain this incentive it would dramatically increase his 2013 ($5 million) and 2014 ($6.25 million) salary.

Some of the payback/escalator amounts may have changed, or been the Broncos responsibility, but from resources available the contract numbers seem to be close to what the Jets are currently on the books for and the incentive in question is explained in some detail.

Here’s what was posted March 25, 2012:

There has been lots of confusion about Tim Tebow’s contract and exactly what he is going to cost. The following is an analysis of his contract: please note that this is pieced together as best as possible using available resources. Hopefully over the next few days more specific contract details will be announced but this should give an overview of what he will cost.

Tebow originally signed a five year $33 million contract in 2010 and while it sounds like a lot most of the money is incentive driven based upon playing time and performance. One obtainable incentive increases Tebow’s contract by $11.25 million.

He needs to play at least 55% of the snaps two of his first three seasons 2010-12, achieved in 2011, or 70% of the snaps in 2013 to potentially reach this increase. The incentive requires more than just achieving a playing time trigger. Tebow will also have to achieve a high quarterback ranking and receive league honors to earn the incentive, but it is possible.

Since the advance consisted of a $1.2 million decrease in 2011 a little over $5 million was left to be accounted for and it was this money that held up the trade. Denver wanted the Jets to repay them for the entire remaining salary advance. The Jets and Denver settled on splitting the difference $2.53 million. This repayment will be included in the Jets salary cap $1.5 million in 2012 and $1.03 million in 2013.

Tebow unlocked some 2012-14 escalators and incentive in his contract with his 2011 performance, which the Jets will be responsible for. 2012 escalator of $310,000 and a playoff bonus of $250,000 increases by $560,000 Tebow’s base salary. He also triggered a 2012 roster bonus $472,500 due in the start of training camp. Escalators in 2013 of $425,000 and 2014 of $165,000 increase his salary as well.

Here’s the breakdown:

2012:

Base Salary – $1.1 million

Roster Bonus- $472,000

Advance Repayment – $1.5 million

Cap Hit – $3.072 million

2013:

Base Salary – $1.055 million

Advance Repayment – $1.03 million

Cap Hit – $2.085 million

2014:

Base Salary – $895,000

Cap Hit – $895,000

Currently Tebow has 3 years at $6 million that the Jets are responsible for but this number could increase given playing time and performance.

The acquisition of Tebow has lead to the trade of backup QB Drew Stanton which has freed up $750,000 in salary space. This move does carry a dead money hit of $500,000 which represents Stanton’s signing bonus.